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August 22, 2023

Does Your Residential Care Facility Need Commercial Auto Insurance?

More than six million police-reported car crashes occur annually, according to the NHSTA. If one of your employees is involved in a car accident while working, your residential care facility could be liable for any property damage or injuries. Commercial auto insurance can protect your facility. Determine whether you need it and what type of commercial auto insurance policy would make the most sense.

Scenarios That Require Commercial Auto Insurance

Your commercial general liability insurance policy excludes claims involving vehicles, whereas personal auto insurance policies typically exclude commercial activities. For these reasons, you need to make sure you have appropriate commercial auto insurance coverage in place for whenever an employee uses a vehicle for business-related purposes.

There are multiple scenarios in which a commercial auto insurance policy is necessary, including when:

  • Your residential care facility owns one or more vehicles. This is the most obvious reason why your residential care facility would need commercial auto insurance.
  • You use the business owner’s personal vehicle for business purposes.
  • Your employees use their own vehicles to run errands. Employees often use their personal vehicles for tasks like picking up supplies. If an employee causes a crash while running an errand, the business could be named in any resulting lawsuits.
  • Your employees use their own vehicles to drive residents. Your employees may not think twice about giving a resident a ride, but doing so can open your facility up to liability if you don’t have the proper insurance in place.

Types of Commercial Auto Insurance

There are multiple types of auto insurance. The main coverage types your residential care facility may need are:

  • Commercial Auto Liability Insurance – This covers third-party bodily injury claims and third-party property damage claims.
  • Commercial Auto Collision and Comprehensive Insurance – This covers damage to the insured vehicle.
  • Hired and Non-Owned Auto Insurance – This provides liability coverage when an employee uses a personal vehicle for business-related purposes. You may also be able to gain coverage for rented vehicles.

Considerations When Purchasing Commercial Auto Insurance

Gaps in your auto insurance coverage could leave you with uncovered claims. When reviewing your auto insurance needs, pay attention to the following issues that could leave you without the coverage you need:

  • Are any of your drivers excluded? Your auto insurance policies may have standards regarding what drivers it will cover based on driving histories.
  • Does the coverage exclude any of the vehicles you use for business purposes? Consider what personal vehicles you use for work-related tasks, such as running errands and transporting residents.
  • Do you have liability coverage? If an employee causes a crash that results in property damage or injuries, you’ll need liability coverage.
  • Do you have coverage for the vehicles and passengers? Liability insurance does not provide coverage for damage to your own vehicles (or your employees’ personal vehicles), nor does it cover passenger injuries.
  • Do you need both commercial and personal auto insurance? If employees only use their personal vehicles to commute to and from work, personal insurance is likely adequate. However, if they use personal vehicles for work-related tasks, you’ll likely need both commercial and personal auto insurance.
  • Are your limits high enough? Property damage and injuries can be expensive. If your business is named in a lawsuit, the court costs and settlements could be high. Determine whether you need higher limits than the policy offers. Consider adding an umbrella insurance policy to increase your liability coverage for multiple policies at once.
  • Do you have all of the auto coverage types you need? In addition to the coverage types mentioned above, you may need additional insurance, such as personal injury protection and uninsured motorist insurance.

Need guidance? Heffernan Insurance Brokers has a long history of working with organizations in the residential care industry. We can help you review your insurance needs and determine whether your seniorl care facility needs commercial auto insurance. Learn more

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